German automaker Volkswagen told car dealers it plans to add import fees to the prices of imported cars sold in the US later this month.
The company's move is one of the first and clear examples of automakers to use price increases to address the 25% tariffs that President Trump has imposed on car and auto parts imports. Customs duties on vehicles will come into effect Thursday, with parts taxation going into effect on May 3rd.
In an April 1 memo to dealers, Volkswagen said the exact price will be determined by mid-April. The New York Times reviewed a copy of the note. The automaker also told dealers it had planned to reduce sales incentives and stopped rail car freight from Mexican plants to the US, but shipments by sea continue.
Volkswagen plans to retain vehicles subject to port tariffs for “close period.” He also informed dealers that the price of a Volkswagen Atlas Sports Utility vehicle, made in Chattanooga, Tennessee, could be affected by customs duties as it includes important import components. The memo said the extent of the impact likely remains unknown until May.
Automakers, including the Audi and Porsche brands, import almost every car they sell in the US. In addition to Atlas, Volkswagen also assembles the ID.4 electric sports utility vehicle from Tennessee.
In a statement, Volkswagen confirmed that it had sent a note to the dealer because it was “very transparent about sailing through this time of uncertainty.”
“We keep our dealers and customers' biggest interest in mind, and once we quantify our business impact, we share our strategy with our dealers,” the company said.
Other automakers are also making adjustments to meet customs duties. Stellantis, who owns Jeep, Ram, Dodge and Chrysler, said Thursday that production has temporarily halted at other plants in Mexico and Canada in response to car duties.
The company said its Chrysler Pacifica minivan and Dodge Charger Muscle Car will be closed for two weeks at its Windsor, Ontario plant. Mexican Toruca plants will also keep Jeep Compass and Wagonia S idle from April 7th for the rest of the month.
Stellantis said the production halts in Canada and Mexico will force them to fire around 900 workers in Indiana and Michigan.
